Circuit City Presentation
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Transcript of Circuit City Presentation
CIRCUIT CITYBy: Nicholas Holt, Silvana Karam, Ashish Patel
Mission Statement
Previous Mission Statement: Throughout our 50+ year history, Circuit City has differentiated itself by creating a shopping experience focused on customer needs and expectations. With over $10 billion in sales, we have grown into a Fortune 500 company of over 35,000 people, with more than 600 stores in more than 100 markets. With our current branding efforts, new store designs, and implementation of process improvement practices, today is one of the most exciting times in the history of Circuit City! It is a time of strategic change and revitalization!
Products and Services of Circuit City
TV & Home Entertainment MP3 & Audio (iPod’s, speakers) Computers & Office Supplies Cameras & Camcorders Car Electronics Video Gaming (PS3, Wii, PSP, Xbox) Movies & Music Phones Repair & Installation (Firedog)
Industry Sector
Sector: Services Industry: Electronic Stores
Position in the Marketplace
Market Leader: Best Buy Circuit City is the #3 Consumer
Electronics Retailer in the industry after Wal-Mart
2008: Circuit City is #215 in the Fortune 500 company list.
Competitors
Direct Competitors Best Buy RadioShack Wal-Mart Dell
Indirect Competitors CompUSA Home Depot
Present Circuit City Stock
52 Week High: $18.87 52 Week Low: $3.44 Current Stock Price: $4.66 Current Stock Value has dropped 88%
Income Statement
2007 2006 2005
Gross Profit 2,928,316 2,830,932 2,568,723
Operating Income or
Loss
-5,303 220,399 97,855
Net Income -8,281 139,746 61,658
The Operating Income or loss declines dramatically in 2007 due to the major turnover rate
As you can see, the Net Income of Circuit City dropped substantially in the past year.
Profit/Loss Analysis
Balance Sheet
2007 2006 2005
Total Assets 4,007,283 4,069,044 3,789,382
Total Liabilities
2,216,039 2,114,411 1,701,948
Total Shareholder
Equity
1,791,244 1,954,633 2,087,434
The Total Assets from 2005-2007 are gradually dropped while the Total liabilities from these years have gradually grown.
The Shareholder Equity has dramatically fallen in the past 3 years
Circuit City Timeline
1949: Samuel Wurtzel starts Wards Company in Virginia 1961: The company goes public 1979: The Superstore format is introduced (32,000sq ft) 1984: Changed its name to Circuit City and became listed
in the NYSE 1999: CircuitCity.com is launched 2004: Acquired InterTAN, Inc. 2006: Firedog was operational 2007: Fired 3400 of the highest paid employees.
Announces plan to explore alternatives for InterTAN, Inc.
Management
CEO: Philip Schoonover Former Vice President of Customer
Segments for Best Buy COO: John Harlow CFO: Bruce Besanko CMO: Peter Weedfald Headquarters: Richmond, Virginia
Marketing
Community Involvement: Boys & Girls Club, Habitat for Humanity, United Way, and the American Red Cross
Wide array of offers from our partners Napster
E-Commerce Site: circuitcity.com “Just what I needed”, “Simplicity
guaranteed” Attracts more customers over age 45
Main Competitors Marketing
Best Buy “Thousands of possibilities, get yours” Targets younger consumers
Wal-Mart “Save money, live better”
RadioShack “Do stuff”
Circuit City spends more money on marketing compared to their leading competitors, yet the competitors still have an edge
Our competitors promote merchandise more aggressively and offer better discount prices for extended periods of time
Customer Service
Circuit City was rated the worst customer service in the electronic retail industry
Under-trained staff leads to a high turnover rate
Many of our associates are part-time, which affects our sales performance and competition
Numerous defective items and restocking fees
Positive Aspects of Circuit City Offers a wide variety of products Teamed up multiple partners…(Napster,
InterTAN, Direct TV, SnapFish, Get Digital, SkinIt)
Firedog prices are much cheaper than Geek Squad
Development
650 stores in the United States In 2003 Circuit City remodeled 222 stores In 2005 Circuit City closed 19 of our
underperforming Superstores Openings in smaller trade areas and urban
locations
If no changes are made…
Possible Bankruptcy Hostile takeover by a possible buyer
(Blockbuster, Inc.) 1.3 Billion Dollar Offer ($6-8 a share)
Merger with Blockbuster Circuit City gains 4800 additional stores
and differentiates itself from Best Buy by offering movie and video-game rentals
Porter’s 5 Forces
Threat of Entry of New Competitors Small computer electronic companies
Threat of Substitutes Non-brand name computers (Acer, Compaq)
Bargaining Power of Buyers (Elastic) Bargaining Power of Suppliers (Inelastic) Degree of Rivalry Between Existing
Competitors Pricing war between small companies
How to Start Over
Need a more experienced management team for Circuit City In the past, hiring executive officials from
other successful companies have worked out well
Better list of priorities and goals for the company to achieve
Objectives/Goals
Relocation & Closing of Circuit City Stores Inside Malls Beside large shopping plazas Smaller and more specialized stores. Moving away
from “superstores” Getting rid of underperforming locations
Be more aggressive in buying new real estate Be more aggressive in marketing and sales to
raise market share Hire more trained and skilled associates to
improve customer service
Firedog Make Firedog more available to small
businesses Clean sweep of the Circuit City Exec.
Board Discontinue international business “The City”
A more desirable shopping experience
Objectives/Goals
Intended Results
The newly appointed executives will turn the company around with better long term decisions.
The opening of domestic segments Prepared for future technology Increased consumer traffic in sales due
to better marketing Will stay the #3 Consumer Electronics
Retailer for now, long road ahead.
Conclusion
By making these changes, we truly believe that Circuit City can be turned around.
New Mission Statement: Circuit City is dedicated to the highest quality of customer service which is done with the highest respect. With a highly praised customer service and satisfaction, it will improve our sales performance. For Circuit City to effectively sell products to customers, sales representatives will try to understand and fulfill the customers needs. With a highly trained team of associates, Circuit City will be successful in the long run.